Thaksin Shinawatra's lawyer says a number of states have made offers to host the government in exile.

AFP: Saeed Khan, file photo

Thailand's former prime minister Thaksin Shinawatra has revealed plans to set up a government in exile, in a direct challenge to the legitimacy of the military, following confirmation of a coup to remove the government led by his presumed proxy and sister Yingluck Shinawatra.

Peter Lloyd analysis

The declaration of a government in exile by Thaksin Shinawatra is the first significant political response by the Thaksin-aligned Red Shirt forces since Thursday's coup.

It appears to indicate a willingness to risk a major escalation in the long-running crisis. Pay close attention to the response of Thailand’s new strongman, General Prayuth Chan-ochab at today's news conference.

The General is an ardent defender of the monarchy and adversary of Thaksin after playing a key role in the 2006 coup that toppled Thaksin Shinawatra.

The General’s rise to Army Chief came after Thaksin's sister Yingluck rose to power as her brother's proxy.

Thaksin's power play could be a part of a strategy to rattle the General and the monarchy and draw armed supporters from the shadows.

A government in exile need do no more than exist to achieve its main purpose and that is to present to the world the stark choice facing Thailand; a return to a business as usual old order under the monarchy, or a new settlement that enshrines the rights of the poor.

The armed forces fear a violent reaction on the street soon but they are just as mindful that they lack the skills and perhaps even the will required to govern for long. History tells it that there is a window of opportunity.

"There's a script they will be following to one degree or another," said Duncan McCargo, professor of political science. "They know that the longer they stay in power the more trouble they are going to get into."

Professor McCargo is doubtful that the return to business as usual will satisfy the non-Bangkok Thai electorate which has been disenfranchised by a succession of coups against legitimate governments.

"Reform means dismantling the informal caste system, reducing psychological dependence on the monarchy and growing an appreciation for the capacity of the rural population to contribute to their democracy," he said.

The decision was relayed by Mr Thaksin's legal adviser, Robert Amsterdam, and revealed exclusively by the ABC.

The announcement comes amid reports that coup leader General Prayuth Chan-ocha will remain at the head of a junta beyond his scheduled retirement in September, according to the Bangkok Post.

General Prayuth has assumed the powers to act as prime minister; except Section 2, which acknowledges that the king is the head of state.

On Saturday night the military junta disbanded the country's Senate and placed all law-making responsibility in the hands of General Prayuth.

"The Senate is dismissed. Responsibility for any laws needing the approval of the parliament or Senate will instead be assumed by the leader of the (junta)," said an announcement on national television.

It is unclear whether any Association of South-East Asian Nations (ASEAN) state would risk breaching the association's bedrock doctrine of non-interference to provide a political safe haven for Thaksin and Ms Yingluck.

It could bring down the political order and harmony of ASEAN, a dull but effective piece of architecture that has assisted socio-economic and political development in the region for decades.

Mr Amsterdam says so far there is no identifiable host state but it is believed by pro-government Red Shirts that there are a number of nations set to offer a safe place.

It is understood that the Shinawatra-led Red Shirts protest movement was anxious to make the government in exile decision public ahead of a widely anticipated statement from the Palace giving direct or veiled support of the monarchy to the military take-over. There has been no official statement as yet.

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It comes as the Thai army ordered another 30 individuals, including academics and activists, to report to the military, adding to the more than the 100 people who have already received that order.

A Thai military spokesman says they will be held for up to a week to give them "time to think".

"We have to keep them for some time to think about their previous actions and about previous incidents, and after that they will become more relaxed," he said.

"There will be no pressure on them and they'll be able to think about what they should do for the best of the country and for themselves, and we will look after them very well."

US issues non-essential travel warning

The US State Department has issued a travel alert advising against any non-essential travel to Thailand. Bangkok remains under military lockdown with a nightly 10pm curfew amid fears of a violent backlash.

The US has suspended about $3.8 million in military aid following the coup and is reviewing the rest of the approximately $11.4 million annual assistance package to Thailand.

"Several Thai military officers told me that they expect significant violent conflict in Bangkok with Red Shirt activists in the next two weeks," said Council on Foreign Relations analyst Joshua Kurlanzick in his latest blog report.

Meanwhile, about 200 people have gathered in Bangkok to protest against the coup.

"We can only get the Thai army station and it's repeated on all channels. There are about 300 channels we have access to, and it all has the same stuff on it," he said.

He says people have mostly been abiding by the enforced curfew hours, though it is unsure how long the curfew will last.

"The rumour originally was it was going to be for about four to five days, but there is very little news coming through so it's impossible to say," he said.

"I believe that it will start breaking down a little bit in the next few days.

"There were a few people out after 10:00 last night. I looked out onto the street and the odd person was taking the risk - typical Thai style is you test it and test it and finally it breaks down unless it's enforced."